#400 - 400th Episode Celebration: What We've Learned in 7 Years
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Car
Jeep Cherokee
The Jeep Cherokee is a type of vehicle called an SUV, which stands for Sport Utility Vehicle. It's designed to be tough and can drive on rough roads and trails, making it great for outdoor adventures. Many people like it because it's spacious and can be used for both daily driving and fun trips.
Term
buy here, pay here
Buy here, pay here means you can buy a car and get a loan from the dealership itself, instead of a bank. It's helpful for people who might not have good credit.
Car
Tesla
Tesla is a company that makes electric cars. They're known for being high-tech and environmentally friendly.
LIVE
Hi, this is Sean Peterson with Buckeye Risk Services.
Graduating my friends, Luke Godwin and Jeff Watson on the 400th episode of the Independent
Dealer Podcast, Buckeye has been a proud title sponsor of the podcast for many years.
Luke and Jeff have done such a fantastic job in providing invaluable content to dealers
to help them be better.
Jeff, Luke, keep up the good work.
We look forward to supporting you on 400 more.
Hey, this is Chris with Cherokee Auto Sales in Knoxville, Tennessee, talking about
the Independent Dealer Podcast.
When I first got into this business, I felt like I was on an island figuring
things out the hard way.
Then I found the Independent Dealer Podcast and everything shifted.
I've listened to every episode connected with Luke and Jeff.
I've joined the 20 group and started learning what it really takes to
succeed and buy, especially invite or pay here.
The conference is game changing.
I've met incredible dealers, built real relationships and picked up strategies
that directly impacted our bottom line.
This podcast and community have been the best investment in my business
hands down, especially since it's free.
Hi, everyone, Robin Berkinshire here from BlitzPay wanted to give a quick
shout out to the Independent Dealer Podcast.
Congratulations on such an incredible milestone.
400 episodes wanted to shout out Jeff and Luke and tell them thanks
for not only bringing conversations to the industry, but for finding
solutions and new ways forward.
Thanks for everything you do to support BlitzPay.
You have been great partners and leaders in the industry, and we
just appreciate you.
Cheers to the next 400.
Hey, everyone.
It's Matt from Raise Motors down in Florida.
I just wanted to give a big congratulations to Luke and Jeff and
400 episodes of the Independent Dealer Podcast.
That is an awesome milestone.
You've built something that really makes a difference for dealers like me.
I've learned so much from the podcast, from leadership to collections
to just real world dealer to dealer talk that you don't hear anywhere else.
Congrats again, guys.
I'm proud of you both.
Proud to call your friends and here's to the next 400.
Take care, guys.
Hi, Bill Nealon here from Tax Max.
Congratulations, Jeff and Luke, on your 400th episode with the podcast.
It's great what you guys do for the industry.
We've been advertising with you guys for four or five years now,
and now I'm actually one of your religious viewers every Thursday morning.
I watch and watch every episode, all 52 weeks of the year.
I can't wait for your 500th episode.
Once again, congratulations for all that you do for the buy,
here, pay, or industry, as well as the retail industry.
And once again, thank you very much.
Congratulations.
Hey, this is Marshall Zerner from the Pacific Northwest with Freeman Motor
Company, giving a shout out to Jeff and Luke from the Independent Dealer
Podcast.
Just want to say that I really appreciate them and their diligence and their
determination to keep the podcast going every week in and out, no matter where
they're at, being at conventions or at their dealership or other people's
dealerships, bringing in vendors, bringing in really good guests and just
giving us really good, useful information from all different places across
the United States.
We love it.
I love hearing from them.
I love being a part of it when they so allow me to.
Thank you guys so much.
Keep it going.
Hey, guys, I'm here at the airport in Atlanta, found a quiet corner and I
wanted to congratulate you on 400 episodes.
Thank you for all you do for Independent Dealers.
You are the epitome of entrepreneurs because you found a void in the
marketplace and you filled it with great content and just
important education that all dealers need.
So I appreciate you and I look forward to 400 more episodes.
Congratulations.
Hello and welcome to this very special edition of the Independent
Dealer Podcast.
Luke, do you know why this is special?
I think I do, Jeff.
You and I are together and it's always special and we're together.
It is it is an anniversary, my friend.
It is a we have hit a milestone.
Four hundred.
Can you believe it's four hundred?
No, I cannot honestly feels like yesterday.
It's wild.
I mean, it's I never thought we would get this far.
Never.
And somebody I was talking to somebody the other day and said
that we had been doing this for seven years and they gave me some
statistic like.
Ninety percent of podcasts don't make it past the third episode.
Oh, yeah, a hundred percent.
I know a lot of people that have started them and I've given them advice.
I told them what to do, you know, technical wise and mentally wise.
And sure enough, I check back in with them a month later, two months later.
Done.
It's yeah, it's something like 90 percent don't make it to to three
episodes and then 95 percent don't make it to 10 episodes.
And then it's like the rest of us are going still.
We are a statistical anomaly and oblivious to the fact that nobody cares.
So that's good.
It bodes a lot and to that point, Luke, here's the other thing.
We haven't missed a week.
We had one week that I remember there was a rerun.
Where we we took like a best of episode, but we've never
ran an actual full episode and we've never not had original
content to some degree, even if it's just, you know, sometimes
we get on in spitball with some nonsense.
Similar to today.
It was funny is sometimes I get text after those nonsense
school episodes, they were like, man, that was great.
And you're like, did you did you listen to this week's or
do you listen to another week and just, you know, I think some
people just like to, uh, it's, uh, refreshing may not be the word,
but it's, you know, it's a habit, a habit of always listening
to the same thing.
And, and I get into those podcast times where I habitually
listen to the same people over and over because it just it's
part of my weekend.
That's what I do.
It's part of my weekend.
That's what I do.
And I appreciate everybody that has done that for all that time.
Yeah, it's, it's really fun to get the feedback of dealers that
say, Hey, you guys are in my ear every single Thursday on the
way to the auction.
I'm learning and, and, and I get it.
Like you said, Luke, I've got podcasts that I come in and
out of, right?
I have some that I'm really hot on for a couple months.
I really enjoy it.
And then I fizzle out or I get too busy, um, or maybe
they changed their format or something happened.
So those that do tune in and listen to us seriously
appreciate it.
It's pretty wild that there is anyone still listening at this
point.
Yeah.
And all the by them listening and then them, uh, requesting us
to speak places.
It's really opened up what we're able to do.
We're able to, to go to different conferences, uh, meet
all these people.
So it's really, um, I really thank them for that, for
giving us opportunity to do things other than this.
Yeah.
So let's break down a little bit more.
I want to bring some, some, uh, some reflection on the
past 400 episodes.
Um, Luke, what are some of the things that you, uh, what
would you say are some of them, the lessons learned?
What, what have you personally learned over the last
400 episodes that kind of stick out to you?
Maybe some of the best advice or most memorable interviews?
Yeah.
You know, one of the things that, uh, you know, I'm
kind of a, a one side, uh, a, this is the way it
has to be done type of, type of dealer by your
pay or store, right?
And, and I believe that my way is the best.
But what, after interviewing all these people and
talking to everybody at conventions and, and
wherever, one of the biggest lessons I've been
taught is that there are so many ways to do what
we do in so many ways to do the car business.
Um, and what you think that wouldn't work at all,
people have been extremely successful at, and it's
just really interesting to see that, that my
way is not the only way.
There are a bunch of other ways that make a lot
of money and that's very interesting.
Yeah.
That's, and on the flip side of that, what I
find too, is a lot of us, you and I have
exposure to a lot of dealers.
We've interviewed hundreds of dealers and I
sometimes get the, it's easy to become jealous
almost of all the dealers and some of, some
of these guys great have done it super well.
And I look at them and I say, man, we interviewed
you, you know, three years ago and you were
just starting out and now you're three times the
size of what I'm doing and you're incredibly
successful and I'm so happy for you because
you were just a rocket ship.
And those are really, really cool.
And on the flip side, there's other ones where
we have interviews and we think, man, this
guy's got it all figured out.
This organization is going to go to the
moon and then they don't explode.
Yeah, it explodes.
And, and we've had, you know, we've had
several people on the podcast who have
fantastically exploded.
And, and that's just part of the car business,
right? And it's part of any business show.
You look at one of my favorite podcasts is
acquired and they had Sam Bankman freed on,
you know, several years ago, talking about
how great he was.
And that jugger's rotten in jail now, right?
And it's just, it's funny how all those
things can happen.
And I'm actually at a dealer this, this
week where that we had on the podcast
several years ago, huge dealer.
And, and I'm in there today and I'm going,
oh, man, oh, man.
And it's just, it's just interesting how
those type things, how the yin and the yang
and then sometimes just just the
spectacularly unproductive businesses
still stay in business.
Yeah, we we've seen a lot of that lately.
And that's probably one of the biggest.
I don't know, man.
I'd say stamps on this last this era of
what we're going through right now is the
number of implosions and the handful that
are struggling and some of our good friends
that won't be in business this time next
year out of no fault of their own
sometimes, just out of bad timing, bad
relationships, turning economies.
It's it's going to be an interesting
mile marker when we say 400 episode
and then we check back in at 450 or
500 and look back on this one and
see where it changed.
Yeah, I mean, that's, you know, another
one of the things that that
we talk about interest, interest
costs and leverage.
But the, you know, probably when we
started all this, I was thinking, man,
I need to I need to get some leverage
so I can grow huge, you know.
And man, I am so glad that my dad
and I decided not to get leverage
because that has turned out to be
most people's death and it will be
over the next year, two years.
Which is interesting.
So when we say lessons I've learned
and I look back on just the last
hundred episodes or so because
we've done this before.
But if I go back to episode 384,
we interviewed Eric Ryan
and he was incredibly open
and just vulnerable about what was
going on with them just two years
ago and and the failure
of that dealership and the bank
lines getting pulled.
And so right around, you know,
minute marker 19 or so.
Man, you just really feel what it
would have been like to be in that
situation where he talks about
going through a divorce, having
their COO booted or kind of left.
And he steps into this failing
dealership is trying to pay off one
bank line with another and just
sees this downward spiral.
And there's not much you can do
in these situations because the
larger car market interest rates
and bank relationships and those
bank decisions, they override
anything you could do.
If you say, hey, give me some time.
I'm going to dig out of this.
All I need is two years and this
market's going to turn around.
And they don't have that kind of
patience and he didn't get that
luxury to to flip the ship around
because there's just no patience
with a lot of banks.
And so you really felt that, I
think, in episode 384.
Yeah, I think there's a lot of,
you know, and dealers feel that
when when we have guests on that
that are real vulnerable, right?
And and and really
tell us how they feel at a
certain time.
Other dealers can, you know, look
back on that at times and maybe
get through a tough period.
And we hope that's what these,
you know, dealers are listening
do when they're in that spot.
So what would you say on your
on looking back on the 400 episodes?
Is there anything you feel like
you got wrong or we got wrong?
Like, I mean, I have to go into
A.I. and really ask at these
questions because I'm sure
there's probably a lot of people
listening.
You've got a lot of stuff we
say that you're like, what the
hell are you guys?
Yeah, I'm multiple things, Jeff.
The first thing.
And I'm sure I said this because
I was saying it everywhere, but
when the when the prices
of cars peak during covid
or when they were peaking,
I used the word, I think, that
was in vogue at that time.
And I said, man, this is transient.
Don't go out and buy inventory.
This is going to last 90 days.
It's going to come back down.
And and we can keep going.
Well, for probably about six months,
I didn't I didn't buy inventory.
I didn't buy fresh inventory.
And I told a lot of people out there
not about fresh inventory.
Hopefully they didn't listen to me
because.
Prices didn't come down for years.
And so if you sat there
with your hands in your pocket
like I did, I missed.
I missed a lot of sales during that
time.
And I think that was something
I really got wrong.
I remember that episode we talked
about you had cut off all your
advertising, you just shut it all
off, shut it off, saving
money.
And and and that's an easy one
because you can flip that back on.
You can flip a switch and put all
your advertising dollars back out
there for the most part
with very little impact.
But I do remember we had that
argument of like, wait, do we
do we double down now?
Or do we not?
And you were.
A little more.
I was breaks.
Yeah, I was hitting the brakes.
And then I did see the quickly
that.
Cars were selling.
And so I bought a bunch of cars
when they were stupidly cheap.
Like I did.
I went out and I just bought them
and we we didn't really even have
to turn our advertising back on
because we were the only ones with
cars.
And so we were able to stop
in the advertising wasn't stupid.
But you know, after that period
where cars started to keep up in
price, I should have just kept
buying because
there was so much money in the
economy.
We could even though we were
paying extra money for those cars,
they would have collected out.
And we talked about that last week
with Blake.
That that was some of the best
static pools we saw because people
had all this money coming in from
every which way.
So I just wish I would have kept
buying maybe for I wish I
wouldn't have stopped buying for
those six months.
I wish I just kept buying through
those because I think it would
have worked out.
Yeah.
One thing I'd say on
the recent charge off situation
and the immigration crackdowns,
you know, I'd always been pretty
adamant in the past that we
we only did people with socials,
right?
And for so many, many years of my
buy here, pay here, we didn't
strongly cater to
the Hispanic community or
undocumented, you know, itins,
things like that.
And we got into that a little bit
more since covid, right?
We were a little more aggressive.
We were we were financing people
with itins and things like that.
And it has come back to bite me
a little bit, not to a large
degree, like a tricholor or
some of these other folks that are
closer to the border are really,
you know, struggling with folks
that have taken cars south and
disappeared or self deported
or any of these other things.
So sticking to my
underwriting guidelines a little
bit, because this is exactly
happened in 2008 when the
housing crisis happened, a bunch
of cars went south.
And I remember those lessons
very well.
And so we didn't do it to the
degree that we did in the past.
But I have had some cars go
south of the border and I won't
get them back.
Yeah, you know, I was listening
to all Tudor Jones this morning
on CNBC and he was talking about
how this is very reminiscent
of the 08
timeframe with the market,
which is interesting.
You bring that up today.
I've never done Hispanics like
it's just not my market.
There are other people in my
town that do it and do it well.
I wish I would have leaned into
that a little more along the way.
Yeah. And and the other one
I think you should have leaned
into is the E.V. tax credit.
I should have leaned into that.
Yes. And you kind of looked at
it like, oh, that's cute.
You do that.
But yeah, you're a fan.
You carry that.
You could have carried it.
Maybe your maybe your market
is not as E.V.
friendly as as maybe mine is
out here.
I don't know.
But that
was been a great program for
me.
I could have done twice as many,
especially here near the end.
So it was good for my cash
flow. I think I probably
filed. I'm I'm almost to
seven hundred thousand dollars
in E.V. credits that we filed
up into the deadline.
So that was a lot of cash for
my buy here pay here customers
that I didn't have to put on
the street.
So that that's been a nice
you know, down payment bump,
let's say, or cash I didn't
have to put on the road.
Yeah, I'm fairly sure that I
told you something to the
effect when you were talking
about that. I was like you
are.
You're you're worried about
something that's kind of shiny
out there and you forget about
your core business.
And I could I definitely could
have.
And so
that was yeah, I was wrong.
You were right.
What's interesting?
So when I go back to Episode
three seventy seven, this was
when we were talking about, you
know, a bunch of things
that are happening in the
industry and what we're
dealing with. But we we
talked about kind of what I
call SAS creep,
which is where these software
companies that we all are a
part of start creeping into
other people's domains and
other people's areas.
And that is one that really
kind of hit home to me and was
a pretty good hit with the
listeners that listen to it
because it's such a good
opportunity for savings right
now. And I think it's kind of
unrecognized.
A lot of dealers look at like
what program can I cut?
What salespeople can I cut?
How can I save some money
this month because things are
slow or I'm just nervous for
the future.
So instead of just shutting off
your advertising, what a good
thing to do is audit your
software companies and say,
hey, can I combine two software
companies into one that has
my current relationship with
this SAS product built out
a new feature where, oh, my
goodness, they have an integrated
booking tool. Now, I don't need a
standalone booking tool anymore
because for an extra two hundred
dollars a month, I can just add
theirs.
So yeah, that's been really
interesting and something I'm
going to keep looking into.
I think we've talked about
software so much over the
years. And I think you have
a little better handle on
software when it comes to how
everything works than I do.
But you've been so
right about how
so many different softwares do the
exact same thing.
And we have to be attentive
to that. And I think it comes
down to talking to our vendors
is, you know, going to
these going to conventions and
talking to and figure out exactly
what they do.
And now, which is even
more interesting, you can use
A.I. on the back of a lot
of of the software you already
have to really create a powerful
tool and maybe able able to
get rid of some of the tools
you're using that are doing
something you could build on your
own.
Yeah, is there any other moments
you feel like you miss before
we transition over?
Oh, man, looking forward to.
This is this is a good one,
Jeff. This is a good one here.
I'm pretty sure when
a carbon of stock hit two
dollars a share.
I said and you can
go back. I'm not sure what episode
that is, but you can go back.
I'm pretty sure I said,
man, it has more likelihood
of going to zero
than it does to 10.
How much is carbon of stock today?
Well, it's at three seventy four.
Three seventy five, actually,
it just just bumped up.
Oh, my you said that.
So yeah, this was probably right
in twenty twenty three
January of twenty three
till about June of twenty three.
You yeah, it dropped down to about
four or five dollars a share.
That's that would have been
a pretty good return.
Yeah, I can't do the math on that.
Who does times?
But that's like
10,000 times, but not really.
Holy moly.
I was so wrong of that.
And I and I I perceived
myself to be a very good stock
picker and under and
understand business very well.
And I one hundred
percent miss that one, Jeff.
I still cannot.
I'm not going to say I'm wrong yet.
No, I'm wrong at the stock price.
OK, I'm not sure I'm wrong
about the business.
And that will shake out.
I just don't what they claim
they are making per unit sold.
I see what they're buying the cars for.
And it's really close to retail.
And I see what they're selling the car for,
because I can see what they're asking
for it on their website.
Those numbers don't math math.
That math don't math.
And so at some point.
I think I would.
I'm I'm approved to be right at some point.
I'm just not there yet.
Yeah, that.
You got to sometimes
you look at the jockey and not the horse
in this situation.
This may be less of like the horse is able,
but the horse is actually on the jockey.
And I think the Garcia's have proven
that they know how to financially
make things happen.
Yeah. And and I think they they sold
a lot of stock at the peak from what I hear.
And they bought a lot of back.
And that's easy to do
when you're hitting all times high
and all times low.
And then you're a wise person
that can time those things.
So anyway, yeah.
And you know what's interesting is that
it may prove out that.
And you see it in the franchise side
that people are just, you know,
these big conglomers are
are eating up everybody.
Right.
And what we're what we're seeing now
in the independent space,
especially about your pay here space,
the availability of capital
is getting harder and harder and harder.
And when that happens,
people like Carvana and Carmax
and some public other publicly traded
institutions.
Are able to use that public money
to to kind of
grab market share.
And they're going to keep grabbing market share.
And so we may see a point where
I don't think the feds would ever get involved
in a monopoly type situation here
because because I don't think they will.
But it's going to make it harder
for the smaller dealer to survive
without capital, without personal capital
and not access to public capital.
Yeah, absolutely.
It washes out a lot of people,
which is not not good,
not good for the moms and pops,
not good for the buy here pay hairs.
You can't get into this business organically anymore.
It's almost impossible to get traction
and buy here pay here
when you're using your own profits.
It's just it's been, you know, it's hard.
It's hard to get started.
And we know guys who have lifted themselves up
by their boot strings,
but I don't even know if that's possible now
in the twenty twenties, twenty twenty fives.
Yeah. Speaking of,
I want to mention one more thing
that I missed before we move on,
which is, you know, it's it's a tough thing.
Luke, you and I have talked to and heard everything.
Probably if there's any dealers
that should be wildly successful in this business,
it would be two guys
who have talked to and heard everything.
Yeah. Yeah.
And so it's really hard for me to sometimes say,
yeah, I probably know what I should be doing.
I probably know how to do it.
I've probably heard how to do it.
I've probably talked to a dealer who's done it
and I could replicate that same model.
But guess what?
Twenty years later, I'm still selling 30 to 50 cars a month
and and still operating the way I'm operating.
So it's really interesting.
And what that illustrates for me is.
There's knowing how to do it and there's doing it.
Yeah. And that's probably the biggest differentiator
between some of and if that's your goal.
We talk about that a lot.
It's OK if it's not your goal to be big.
It's OK if it's not your goal to sell 200 cars a month.
It's OK.
You can make a really good living selling 30 cars a month.
No problem and have a good lifestyle balance, too.
But it's the execution and that's the difference, right?
Those dealers that have shot for the moon,
they've made relentless execution
and just been fearless in taking out the line of credit
if they had to getting a flooring line, buying cars,
stocking inventory, training their salesman,
fixing their processes, just executing.
So we can all hear it.
We can listen to podcasts every Thursday for 35 minutes,
but it's those that execute to make all the difference.
And it's executing at the right time.
And it's dumb luck and you bring this up a lot.
You know, they're very smart dealers.
We talk to that that do really well.
And then there's very smart dealers that we talk to
that have bad timing and so timing and execution.
You can shoot for the moon.
Bad timing and bad bad bad timing and good execution
is not very good, but you can have good timing
and bad execution and do fine.
So it is funny to see those things happen
and we've seen it a lot.
Yeah. So, Luke, let's transition to looking ahead.
You know, I don't know that we're going to do another 400 episodes.
I hope so. I hope to see another 400 episodes, buddy.
It'll just be me and you, just old guys talking to nobody.
Like, we're not even hitting record anymore.
We're just like.
That would be like we would at that point,
if we do 400 more episodes, that'll be a total of like 15 years.
Yeah, I don't I'm not going to live that long.
I'm pretty confident.
That's it.
Oh, yeah, it's not happening.
You're going to be talking to the AI version of me.
What do you see going on, though?
I mean, obviously we talk about credit cycles
and this is, again, not to beat a dead horse,
but but as credit titans, which is what we love.
When you say when the guy on CNBC says
today is reminiscent of 2008, the difference with 2008
and speaking specifically for buy or pay here dealers
is you had a really quick drop, a really quick hit.
You hit the bottom overnight almost and a lot of good people
ended up with Brad credit basically overnight.
And then 2010 was a great build out, right?
We had good customers with bad credit.
We had a ton of repos cars were really cheap.
We didn't know how good we had it in 2010.
Right.
This has been a slow drag to the bottom, in my opinion,
not quite the same, but eventually there will be a bottom.
We don't know how deep that looks.
We don't know how many people are going to be pushed into our
demographic, the good people with bad credit scenario.
Banks get tighter, lenders get tighter, tighter.
We lose a bunch of those subprimes that aren't just going to touch
the 500 credit scores anymore.
What happens to us?
I mean, is that the golden age again?
Well, our car is just too expensive now.
So ever since like 2015, every time you go somewhere,
the old timers talking about how great it was in 2010, right?
And they're talking about, oh, it's going to be next year.
Next year, it's going to happen.
All these banks are pulling out a subprime.
It's going to be our time to shine again, man.
I've been hearing this for 10 years.
Um, it may happen.
It may happen.
I don't think it's going to happen.
I think that there is so much cash in the
to invest by these big, these big credit houses
that they're going to continue to buy subprime.
And these new car dealers are so dependent on
subprime sales and selling used cars that
I don't think we're going to see it again.
But that doesn't mean there's not really good money
to be made in the buy here, pay here space
in the subprime retail space by dealers
that do it the right way and have their own capital,
reinvest their own capital in their dealerships.
You can't build these things with other people's capital.
And, uh, the more that happens,
the more we're going to see dealers go out of business.
So, um, I see, I don't see the golden age of buy here, pay here
or the golden age of subprime retail coming back anytime soon.
Interesting.
And it seems like the biggest piece to that puzzle to me,
and maybe I'm looking at this too simply, but back in the day,
when you did borrow money from an institution,
you were still paying 15 percent, right?
Yeah, yeah.
But you had a, you had the same interest spread as we do now.
The difference is we had a larger margin.
Yeah.
And we just don't have that anymore where we used to
consistently collect, you know, whatever it is, five to six
grand markup, plus you'd have another five to six grand on
the back end in interest.
And that was on a $5,000 car.
So your capital investment and your return towards your cash
investment over the course of that 36 months was great.
Repos were somewhere in the same area for the most part,
depending on the time period.
Yeah, but we've lost, I feel like that spread where now I'm
selling an eight or $10,000 car.
So I'm selling twice as much cash in car and I'm still
maybe making the same gross margin on twice as much cash
investment, so basically my ROI is cut in half.
The interest has doubled.
The interest expense has doubled.
It was still healthy.
Yeah.
Yeah.
And, and the, the margin is, is half.
Yeah.
And so, so it's a, it's a perfect storm.
So it's all about your own money.
That's all about change.
That might not change.
I don't see how it could.
I don't see how you can have deflationary cost of cars.
I don't, I mean, to a point they can deflate, but they
can't, they can't deflate back to where they were prior
to that, just because it's your cost of what it makes
to men, takes to manufacture a car.
Yeah.
It's the cost to manufacture and it's the cost of parts
and availability and that will take, if it ever shakes
through the system, I mean, there's just, you know, you
look at used cars, there's not a plethora of parts
out there that are cheap, then I can rebuild and get
a cheap car.
Stuff pretty much drops off and it's gone.
It's worthless.
So yeah, the basic fundamentals and building blocks
are not there.
And then so unless we have some sort of a drastic
change in the economy or the business model of
vehicle ownership, you know, whatever that is.
Yeah, that's a tough road with little spurts of
excitement, I feel like.
That's, I mean, yeah.
And that's what you're talking about.
I think we're going to see a new business model.
I think it's what we're going to see based on the
same, based on the same fact that subprime people
need cars, it's just going to be a different
business model.
Hmm, interesting.
Anything else looking forward, Luke?
You know, I just, I think that the good dealers
doing it the right way are the ones that are
going to be successful.
And that's a simple thing to say.
But you can't just, you can't just get into this
business and buy a car for $10 and sell it for
20 and think that that's a business model.
And I, I feel like what happens as
maybe I'm wrong and this could be one of those
things that we put a little cliff note, little note
on, little paperclip, um, the business model
itself and being a hybrid, I'm looking to sell
cars through any avenue possible.
And I've got a house bank and I've got subprime
and I've got all the banks and credit unions
also for my prime buyers.
I am a buy here, pay here, but I am
honestly 50 50 nowadays with how I finance
cars because I'm looking to get everybody
into a vehicle regardless and it's hard to
be everything to everyone, but I can't get
enough good buy here, pay here cars to do that.
I don't want to lose a good buy here, pay
here customer once they rebuild their credit
and move on, you know, I've got a reputation
in my community where I can sell a Tesla
or a nice Denali or something and the
customers, the buyers still come to me
because of our image.
So I don't know if that's the future
of the dealership, um, where we're looking
for all avenues of financing, all avenues
of vehicles or maybe I don't know.
I think that might be, I don't think
it's going away.
We're going to be selling cars, private
ownership for the rest of my life.
Now my kids and my kids' kids, I don't
know about that, you know, um, like
you said, it may be a whole new
business model, which is ride sharing
or, you know, autonomous fleets or,
you know, individual car ownership is
only for the elite that have their
own private test tracks and drive
in separate carpool lanes.
You know, who knows what that's
going to bring in 50 years, but I
think for our lifetime, we're still
going to be selling and financing
cars. Yeah.
You know, and I want to tell
everybody out there, you know,
it's like it what's one thing
you can take from what we talk
about all the time and it's have
a good business plan, Jeff, and
use, you know, use as much of your
money to build a great business,
not, not someone else's.
I just want to keep saying that
because I see it all the times
where this is getting dealers in
trouble and I don't want dealers
in trouble.
And so what they can do in that
situation is they can rewind and
say, I don't need, I can run
a dealership. If I love cars and
I love selling vehicles, I can run
a business model that's not
dependent on leverage.
Yeah, I can do 30 cars
a month. Can I scale this down to
20 cars a month that I can do with
my own cash? And maybe I do a
couple subprime, right?
The only reason why I'm stuck on
this debt cycle is because I
think I need to sell 100 buy
here pay here's or 50 buy here
pay here's.
Yeah, I think I think if you're
getting started, you know, and
you save up $10,000, but you
figure out how to turn that
10,000 to 20,000, right?
And it might be selling five
cars a month and it might be you
on your own doing it.
So I think there's always these
avenues to to build up other
than getting getting heavily
in debt and putting your future
at risk.
Yeah. And like you said, building
other people's businesses
financially risky
at the expense of your own,
right? The financial risk of
your own business.
That's it's a tough thing to
balance.
Luke, that's great, man.
Four hundred episodes.
Look forward to four hundred more
even if you're just cruising around
a wheelchair, buy here, pay here
wheelchairs.
That'll be where he pivots.
Oh, no, well, there's a little
Walker. Thanks.
Yeah, a little jazzy is a hover
board. You'll be fine.
It's probably old folks at the
old folks home.
That's funny. No, you know, I
really appreciate you coming to
me, Jeff, and getting us
starting in this.
It's been very rewarding for me
and and hopefully rewarding for
the for the dealers that
listen.
I plan to do it for another
four hundred episodes.
All right.
Let's do it. Sounds good.
All right. See you.
About this episode
Celebrating 400 episodes, Luke and Jeff reflect on their journey over seven years, sharing insights and lessons learned from the independent dealer community. They discuss the evolution of the podcast, the importance of community support, and the diverse strategies dealers employ to succeed. Notable guests express gratitude for the podcast's impact on their businesses. The hosts candidly address past mistakes, market challenges, and the future of the buy here, pay here industry, emphasizing the need for adaptability and solid business practices.
Original notes
Join us for this special milestone episode as Jeff and Luke celebrate 400 episodes of The Independent Dealer Podcast! After 7 years and never missing a week, they reflect on the biggest lessons learned, what they got wrong, and what's ahead for independent dealers.What You'll Learn:-The biggest lesson: There are countless ways to succeed in the car business - not just one "right way"-What they got wrong: Luke's "transitory" Covid pricing call and the Carvana stock prediction-Why the "golden age" of buy here pay here from 2010 may never return-How leverage and interest costs are taking down successful dealers-The hybrid dealership model: Mixing BHPH with subprime and prime financing-Why building with your own capital is more critical than ever👇 Don't forget to like, comment, and subscribe for more strategies from industry experts!Thank you for listening. We hope you learned something new. Let us know what you think.Leave us a review www.theindependentdealer.com [email protected] the businesses that support the podcast:Blytzpay for your credit card processing and text communications. Tell them IDP sent you to get 3 free months!http://www.blytzpay.comBuckeye Risk Services for all your education and reinsurance needshttp://www.buckeyerisk.comTaxmax for flexibility with your tax returns. Use the code "Podcast2024" for 40% off sign up!http://www.taxmax.comIgnite Consulting Partners are there to identify problems, create solutions, and help your business thrive!http://www.ignitecp.comPlease subscribe, leave us a review, and share with a friend.Connect with us online:/ independentautogroup/ jlukegodwin/ sendtojeffwListen to all our episodes on Anchor:https://anchor.fm/theindependentdealer
The Independent Dealer Podcast
Jeff Watson & Luke Godwin
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36:39